Regulation or Deregulation
Dennis AuBuchon
October 16, 2008
Today there is much talk about regulation or deregulation in this election year. We as citizens must understand the differences and impact of regulating or not regulating industries. The talk has mainly centered on projecting the negatives of each option. Each of the Presidential candidates has talked about regulation or deregulation and what their approach would be if they were elected. What must or should happen is an explanation of what each option means and the impact to society today where they both exist. Before we can make a valid decision in this election year, we must understand the concept, the benefits and the negatives of each. This article will attempt to identify when each are applicable in society today.
Each approach requires an evaluation to assure the desired outcome is achievable. Regulation and deregulation does not always achieve the purpose for which they were intended. When we make decisions about these types of actions, we must be careful to understand the principles. There are critical areas of society, which require that regulations be in place. Examples of these are medicine, safety, national security, anti-trust, environmental, utilities, national defense, food, and disaster relief.
Medicine is one critical area where regulation is important. The medicines we use in our daily lives must be properly tested and monitored to validate the claims by manufacturers. It is important to have regulations to monitor the medical claims of manufacturing companies as the lives of those who use them may be affected. Medicines must have oversight to assure they work as they are claimed by the industry and that any side effects or safety concerns are properly identified. If deregulation were in place for medicines many questions and concerns would be raised about the safety of medicines placed on the market for sale.
Making the decision to regulate an industry requires that it be made for the right reason and based on sound judgment. Problems in industries do not always require regulation to solve them. The consequences of regulation or deregulation must be considered for the specific industries, which are being considered for the action. Regulation is not the answer to all our problems. Individuals must take responsibility for their actions and be accountable. Government cannot solve every problem by simply regulating it. One key point of regulation, which must be understood, is the fact that if the regulations in place are not monitored and enforced they are worthless. The financial crisis we are now in is a good example of what can happen when problems are ignored.
It has been mentioned several times in news stories that intervention by the government in dictating actions by private companies in the financial industry created this present crisis. When the government dictates or heavily suggest that certain decisions should be made which have no basis it creates problems. Financial institutions must make sound decisions. They should not be forced or strongly suggested by the government to make loans, which are not supported by the ability of the individuals to repay them.
I am not suggesting that there may not be certain situations where unsecured loans are sound decisions. These loans however, should not be as rampant as in our present situation. While the financial institutions involved in the present crisis are hurting, the management of the organizations must take some responsibility for the unsound nature of the loans they have made. Financial organizations and the management of them must take responsibility for their actions and not expect someone to bail them out when things go wrong.
Regulation or deregulation by the state or federal government is something that should carefully be decided. Government should not be in the mode of controlling or dictating the actions of companies or individuals except in areas previously mentioned in the first paragraph. The key question in deciding whether to regulate or not is how to achieve the desired outcome. Regulation, which does not have the methods needed to achieve the desired result, will fail. Many times mandates are placed on the states for programs, which the federal government does not provide funding or very little. These programs place a burden on the financial reserves of state governments. In many cases, it affects the normal financial responsibilities of the state by reducing the amount of revenue for other necessary state programs.
Regulation involves establishing laws or requirements, which the state must follow to receive government funding. We are currently in a financial crisis, which from reports, was caused by government regulation. I am not saying that government control to some extent is needed to turn around the financial industry and to protect the taxpayer money, which has been allocated. In most cases, supply and demand will dictate the success or failure of companies with the exception of industries such as utilities. This industry must have oversight for the prices they charge. It is in the best interest of state governments to regulate utilities to avoid overpricing of energy to the public, which uses the service.
Each state and the federal government have various programs, which they feel benefits the public. Regulation and the impact of it cause additional costs to states and organizations impacted by the rules. There are those who say we need more regulation rather than deregulation. The cost of government increases when new regulations are imposed. While they made be needed in certain cases government should be more efficient and reduce costs and spending rather than increase them. Creating big government, I feel, restricts the proper principles of supply and demand to work.
In summary regulation is not all bad but it must be used sparingly and only where the need actually exist. The imposing of regulations should not be based on the opinion of individuals but the necessity for them. While opinion is involved the decision to regulate or not regulate it should be based on actual data and the impact if regulation were not imposed. Regulation increases the cost of government not only at the federal government level but also at the state level. Several government programs or issues should be regulated as it is in the best interest of our citizens. Some of the areas have previously identified such as environmental, anti-trust, medicine, safety, national security, utilities, national defense, food, and disaster relief.
One main point to consider along with the areas identified is when taxpayer dollars are involved there is a need for regulations. Enacting regulations is not the end as there needs to be oversight to monitor the expenditures and there needs to be qualified individuals doing the monitoring. When discrepancies or potential problems are identified, the level of government, which enacted the regulation, must take action to resolve problems or prevent potential problems.
In the matter of the current financial crisis from news reports, the problems appeared to be identified but were ignored by the individuals charged with the oversight. The warnings of individuals who saw the potential risk to the financial industry were put aside and we are now paying for that mistake. Regulations are enacted to some extent to assure programs are working efficiently and within the constraints of the requirements. Other government programs such as Medicare need to be monitored and in some cases audited to assure the program is not being abused.
Other oversight issues involve the need to approve mergers of companies, which may in fact restrict trade and competition. In some cases, this involves the potential creation of a monopoly. On the issue of deregulation, there are many industries, which have worked well without the intervention of government at either the state or federal level. One example is the cell phone industry. There is competition and the prices and various programs or plans benefit the consumer. The cell phone industry is just one example but to support the concept of deregulation one must understand how regulation hampers completion. When regulations are imposed there are limits placed on industries for various aspects. If the limits restrict the capability to be profitable, companies will fail. Regulation also hampers the prospect of new companies entering the picture and creating competition. Regulations cost money and only the larger companies to some extent can afford to establish the controls necessary to assure they do not violate the law.
Deregulation can and has increased the possibility of competition and should be allowed except in the cases identified in this article. Competition is healthy for the economy and benefits the consumer. The law of supply and demand impacts the prices companies can charge. When companies charge more than what the consumer wants to pay, they will either not purchase their product or service or limit the amount they buy. They may also go to their competition if they feel they are getting the value for less money. One must be careful to look at the quality of the product or service as price should not be the sole factor in purchasing a product or service. Our economy was built on competition and should be allowed to continue. Regulation increases costs and restricts the natural principle of supply and demand. This principle is engrained in our society and government should not create situations, which affect this principle and allow it to work.
Each approach requires an evaluation to assure the desired outcome is achievable. Regulation and deregulation does not always achieve the purpose for which they were intended. When we make decisions about these types of actions, we must be careful to understand the principles. There are critical areas of society, which require that regulations be in place. Examples of these are medicine, safety, national security, anti-trust, environmental, utilities, national defense, food, and disaster relief.
Medicine is one critical area where regulation is important. The medicines we use in our daily lives must be properly tested and monitored to validate the claims by manufacturers. It is important to have regulations to monitor the medical claims of manufacturing companies as the lives of those who use them may be affected. Medicines must have oversight to assure they work as they are claimed by the industry and that any side effects or safety concerns are properly identified. If deregulation were in place for medicines many questions and concerns would be raised about the safety of medicines placed on the market for sale.
Making the decision to regulate an industry requires that it be made for the right reason and based on sound judgment. Problems in industries do not always require regulation to solve them. The consequences of regulation or deregulation must be considered for the specific industries, which are being considered for the action. Regulation is not the answer to all our problems. Individuals must take responsibility for their actions and be accountable. Government cannot solve every problem by simply regulating it. One key point of regulation, which must be understood, is the fact that if the regulations in place are not monitored and enforced they are worthless. The financial crisis we are now in is a good example of what can happen when problems are ignored.
It has been mentioned several times in news stories that intervention by the government in dictating actions by private companies in the financial industry created this present crisis. When the government dictates or heavily suggest that certain decisions should be made which have no basis it creates problems. Financial institutions must make sound decisions. They should not be forced or strongly suggested by the government to make loans, which are not supported by the ability of the individuals to repay them.
I am not suggesting that there may not be certain situations where unsecured loans are sound decisions. These loans however, should not be as rampant as in our present situation. While the financial institutions involved in the present crisis are hurting, the management of the organizations must take some responsibility for the unsound nature of the loans they have made. Financial organizations and the management of them must take responsibility for their actions and not expect someone to bail them out when things go wrong.
Regulation or deregulation by the state or federal government is something that should carefully be decided. Government should not be in the mode of controlling or dictating the actions of companies or individuals except in areas previously mentioned in the first paragraph. The key question in deciding whether to regulate or not is how to achieve the desired outcome. Regulation, which does not have the methods needed to achieve the desired result, will fail. Many times mandates are placed on the states for programs, which the federal government does not provide funding or very little. These programs place a burden on the financial reserves of state governments. In many cases, it affects the normal financial responsibilities of the state by reducing the amount of revenue for other necessary state programs.
Regulation involves establishing laws or requirements, which the state must follow to receive government funding. We are currently in a financial crisis, which from reports, was caused by government regulation. I am not saying that government control to some extent is needed to turn around the financial industry and to protect the taxpayer money, which has been allocated. In most cases, supply and demand will dictate the success or failure of companies with the exception of industries such as utilities. This industry must have oversight for the prices they charge. It is in the best interest of state governments to regulate utilities to avoid overpricing of energy to the public, which uses the service.
Each state and the federal government have various programs, which they feel benefits the public. Regulation and the impact of it cause additional costs to states and organizations impacted by the rules. There are those who say we need more regulation rather than deregulation. The cost of government increases when new regulations are imposed. While they made be needed in certain cases government should be more efficient and reduce costs and spending rather than increase them. Creating big government, I feel, restricts the proper principles of supply and demand to work.
In summary regulation is not all bad but it must be used sparingly and only where the need actually exist. The imposing of regulations should not be based on the opinion of individuals but the necessity for them. While opinion is involved the decision to regulate or not regulate it should be based on actual data and the impact if regulation were not imposed. Regulation increases the cost of government not only at the federal government level but also at the state level. Several government programs or issues should be regulated as it is in the best interest of our citizens. Some of the areas have previously identified such as environmental, anti-trust, medicine, safety, national security, utilities, national defense, food, and disaster relief.
One main point to consider along with the areas identified is when taxpayer dollars are involved there is a need for regulations. Enacting regulations is not the end as there needs to be oversight to monitor the expenditures and there needs to be qualified individuals doing the monitoring. When discrepancies or potential problems are identified, the level of government, which enacted the regulation, must take action to resolve problems or prevent potential problems.
In the matter of the current financial crisis from news reports, the problems appeared to be identified but were ignored by the individuals charged with the oversight. The warnings of individuals who saw the potential risk to the financial industry were put aside and we are now paying for that mistake. Regulations are enacted to some extent to assure programs are working efficiently and within the constraints of the requirements. Other government programs such as Medicare need to be monitored and in some cases audited to assure the program is not being abused.
Other oversight issues involve the need to approve mergers of companies, which may in fact restrict trade and competition. In some cases, this involves the potential creation of a monopoly. On the issue of deregulation, there are many industries, which have worked well without the intervention of government at either the state or federal level. One example is the cell phone industry. There is competition and the prices and various programs or plans benefit the consumer. The cell phone industry is just one example but to support the concept of deregulation one must understand how regulation hampers completion. When regulations are imposed there are limits placed on industries for various aspects. If the limits restrict the capability to be profitable, companies will fail. Regulation also hampers the prospect of new companies entering the picture and creating competition. Regulations cost money and only the larger companies to some extent can afford to establish the controls necessary to assure they do not violate the law.
Deregulation can and has increased the possibility of competition and should be allowed except in the cases identified in this article. Competition is healthy for the economy and benefits the consumer. The law of supply and demand impacts the prices companies can charge. When companies charge more than what the consumer wants to pay, they will either not purchase their product or service or limit the amount they buy. They may also go to their competition if they feel they are getting the value for less money. One must be careful to look at the quality of the product or service as price should not be the sole factor in purchasing a product or service. Our economy was built on competition and should be allowed to continue. Regulation increases costs and restricts the natural principle of supply and demand. This principle is engrained in our society and government should not create situations, which affect this principle and allow it to work.
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